KfW Bankengruppe, the German government owned development bank said it is well position to resume capital market activities in the second half of 2009 and said that simply structured securitizations will still be important for the credit supply of small and medium sized businesses or SME’s.
"Although funding via capital markets in the first half of 2009 was not a walk in the park even for big international issuers, the last six months show how well KfW is positioned in the global markets", said Dr. Gunther Braunig, member of the managing board of KfW.
The bank successfully refinanced its promotional business under the difficult economical climate. In the first half of the year KfW raised EUR 51.2 billion ($71.3 billion) in the international capital markets - two thirds of the volume announced for 2009.
KfW was also the only issuer in its segment to issue large-volume bonds in all benchmark maturities (three, five and ten years). So far the bank has raised equivalent of EUR 29.5 billion under its benchmark programs. "Our issuing activity in long maturities is all the more noteworthy as in volatile times, risk-conscious investors tend to look for paper with short maturities,” said Braunig.
Investors have been showing greater willingness to take risks in regard to currency, maturity and issue structure; however, they continue to keep a close eye on the issuer's credit quality. As for the securitization market, Braunig considers a transaction concluded with Postbank through KfW's securitization platform PROVIDE in June as a "positive signal". A portfolio of German housing loans in a volume of roughly EUR 1.5 billion was securitized under the deal.
"Simply structured securitizations, which the banks use primarily as a means to refinance their core business and reduce their capital charge, will remain important in the future as well, particularly to ensure the credit supply for SMEs", he said. "They are an economically useful instrument, and for this reason we will continue to offer our securitization platforms and our expertise in order to support the lending operations of banks for SMEs and for private housing construction."